Morning Market Overview
Nearest delivered New York Mercantile Exchange oil futures and Brent crude on the Intercontinental Exchange settled the midweek session shallowly mixed after mostly trading lower early session on bearish inventory data and weak manufacturing activity in April, with West Texas Intermediate paring losses in market-on-close trade.
Conflicting economic reports were pushed aside by an unexpectedly steep 9.9 million bbl build in U.S. commercial crude stocks for last week reported midmorning by the Energy Information Administration that widened a year-on- year surplus to 34.6 million bbl or 7.9%.
Gasoline stocks also increased 900,000 bbl against market calls for a 1 million bbl draw, although demand continued to catch up with the year-ago pace while up 140,000 bpd or 1.5% during the four weeks ended April 26 against the comparable year-ago period. Distillate stocks were drawn down 1.3 million bbl, although demand is slipping against year ago.
NYMEX June WTI futures settled down $0.31 at $63.60 bbl, while ICE July Brent gained $0.12 with a $72.18 bbl settlement. NYMEX June ULSD futures rallied 1.63cts to $2.0942 gallon, while June RBOB futures trimmed a loss to a $2.0414 two-week spot low with a $2.0642 gallon settlement, down 0.26cts. U.S. dollar whipsawed higher after trading down to a two-week low following the decision by the Federal Reserve to hold the federal funds rate unchanged at 2.5%, while again promising a careful approach before resuming monetary tightening amid low inflation.
“In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes,” read the Federal Open Market Committee statement released at 2 PM ET. Central bank officials said since their previous meeting in March, the “labor market remains strong and that economic activity rose at a solid rate.”
The finding followed this morning’s Institute of Supply Management report that showed a sharp an unexpected 2.5 point drop in its manufacturing index to 52.8 in April, a two-year low, while the more volatile Purchasing Managers Index edged up to 52.6.
While the decline in the manufacturing index reinforces opinion that underlying details of last week’s reported strong 3.2% growth rate in first quarter gross domestic product are worrisome, private payroll provider ADP reported a greater-than-expected 275,000 increase in private payrolls in April, and revised March’s job total up 22,000 to 151,000.